March 8, 2018 / 11:09 PM / 10 months ago

UPDATE 2-Brazil to seek exemption from U.S. trade tariffs, minister says

(Recasts to add comments by trade minister, context)

By Bruno Federowski and Anthony Boadle

BRASILIA, March 8 (Reuters) - The Brazilian government will try to negotiate its way out of newly announced U.S. tariffs on steel and aluminum imports but could take stronger action to protect its industry if those talks fall through.

Acting Trade Minister Marcos Jorge refused to rule out any potential responses to U.S. President Donald Trump’s protectionist swing in an interview with Reuters, such as an appeal to the World Trade Organization (WTO).

“We will work to exclude Brazil from this measure,” he told Reuters after meeting with U.S. Secretary of Commerce Wilbur Ross in Asunción, Paraguay. “I don’t rule out, if necessary, resorting to any other measure to protect the national interest.”

Brazil, the United States’ No. 2 steel supplier, exported $3 billion worth of iron ore-based products to the United States in 2017. That is a fraction of last year’s $67 billion trade surplus but still a boost to its economy as it emerges from the deepest recession in decades.

Trump exempted Canada and Mexico from the 25 percent tariffs on steel imports and 10 percent for aluminum, leaving the door open for other countries to negotiate their exclusion.

Jorge said he expects Brazil, which has run a trade deficit with the United States since 2009, to easily join that group.

In a joint statement, Brazil’s foreign and trade ministries said the tariffs will strongly hamper Brazilian exports and are incompatible with U.S. obligations toward the WTO.

A senior Foreign Ministry official said Trump’s “unprecedented” decision had put trade relations between the United States and Brazil in “uncharted waters” that could even lead to retaliation.

“Nothing is off the table,” said the official, who asked not to be identified because of the sensitivity of the matter.

The Brazilian government will have to examine closely what the U.S. measures involve because, he said, Trump’s address was very general and aimed at the U.S. public, but appeared to allow for voluntary export restrictions and other concessions that would avoid the application of tariffs.

The Brazilian steel industry association called the tariffs an “extreme” measure that would place Brazil in a vulnerable situation to defend itself from the current world oversupply that will be increased by Trump’s decision.

The country’s main industry lobby, the CNI, said in a statement Brazil should resort to the WTO and, if it wins its case, use its right to retaliate. (Reporting by Bruno Federowski and Anthony Boadle; Editing by Peter Cooney and James Dalgleish)

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